Israel’s Iran attack threatens an early Trump win: Lower energy prices
President Trump has been able to argue that his economic policies aren’t stoking inflation and point to inflation prints cooled by falling energy prices as evidence.
But rapid-fire developments in the Middle East could put that case in jeopardy.
Thursday night’s airstrikes from Israel across Iran immediately shook up oil markets with fears that a protracted war could lead to higher oil prices and inflation this summer.
The attack spiked future prices for crude oil by as much as 13% before a retreat Friday.
And new analyses from JPMorgan Chase (JPM) underlined the larger stakes.
One released Friday morning suggested Trump will be focused in the days ahead on his “primary objective of maintaining low energy prices,” but there is nevertheless now a 17% chance of a “worst-case scenario” in the region with things like oil shipping lanes blocked.
That’s a scenario that “could spike oil prices to $120, driving US CPI to 5%.”
A separate note from Bloomberg Economics underscored the point, writing that a sustained increase in oil prices would add to the inflationary impulse already present in the US from Trump’s tariffs.
The late night attack from Israel, a spokesman for the country said, was focused on Iran’s nuclear facilities and its military chain of command and not its oil infrastructure.
But it immediately raised concerns about what a protracted war could mean for the transit of oil through the Strait of Hormuz, which is a waterway where tankers are estimated to carry 17 million barrels of oil each day.
The prospect of more expensive energy would also carry added political saliency in the US ahead of the coming summer driving season.
The new uncertainties could also make it more difficult for Trump to keep touting lower inflation, as he did earlier this week when falling prices at the pump held down a key May price reading.
It could also further complicate his already fraught relationship with Federal Reserve Chair Jerome Powell, who has held rates steady due to uncertainties surrounding Trump’s economic policies but could have additional uncertainty to contend with.
In a note Wednesday, Joe Brusuelas of RSM US suggested that the US economy is well-positioned to weather the disruption even as there will be economic costs. He said current conditions in the region could mean “the consumer price index would increase to 2.5% at a minimum in June from the current 2.4% and economic growth would be dragged down.”
Trump himself immediately responded to the attacks with multiple social media posts that didn’t address energy but urged Iran to make a deal to stave off additional attacks “before there is nothing left.”
Yet the next steps could be increasing escalation, with Benjamin Netanyahu releasing his own statement promising more attacks “for as many days as it takes.”
President Donald Trump answers questions in the East Room of the White House June 12. (Demetrius Freeman/The Washington Post via Getty Images) ·The Washington Post via Getty Images
“I don’t like — the oil prices have gone up just a little bit over the last few days,” Trump said and then joked with his Energy secretary, saying those increases almost led him to “call and just really start screaming.”
The comments from the president underline the link between energy and inflation, with this week’s cooler-than-expected CPI reading held down by falling energy costs.
Gasoline has seen a 12% drop in prices over the last year, with the government’s energy index dropping 1% month over month in the most recent report.
Those are drops that have been touted again and again by Trump and his aides.
“Core” inflation in May, which excludes food and energy costs, found inflation coming in at a 2.8% rate over the past year, which is still above the Fed’s goal of 2%.
The effect of a sustained price shock on oil and the possibility of higher prices this summer could have a wide variety of effects — and not positive ones in Trump’s view.
For one, it could put pressure on the president to dial back some of his “Liberation Day 2.0” tariff plans, with Trump and his aides again and again pushing back on economists predicting inflation effects in the months ahead from tariffs.
Henrietta Treyz of Veda Partners pointed out in a note events “could put pressure on the president to abstain from hiking tariffs even against countries who have not negotiated a deal by July 9th.”
Rising prices could also be another factor in Trump’s increasingly combustible relationship with Powell, who has urged patience on monetary policy due to the uncertainty surrounding Trump’s policies.
Just yesterday, Trump again slammed Powell as a “numbskull” as part of his pressure campaign to get the central bank to lower rates quickly.
Trump also said in those comments that he would be fine with higher rates if inflation were going up.
“But it’s down,” he claimed instead, “and I may have to force something.”
The Bloomberg analysis this week also underscored potential issues ahead from Powell’s side, finding a “concern that inflation expectations are not firmly anchored … would be difficult for Fed Chair Jerome Powell & Co. to look through.”
This story has been updated with additional developments.
Ben Werschkul is a Washington correspondent for Yahoo Finance.
The most $80 West Texas Intermediate (WTI) crude oil call options were traded on Friday since January Written by: Olumide Adesina • Saturday, June 14, 2025 • 1 min read • Last updated: Saturday, June 14, 2025 Add an article to your Reading List Register now to be able to add articles to your reading
(Bloomberg) — It’s the kind of geopolitical flashpoint that might once have triggered a full-blown market meltdown: Israeli warplanes struck Iranian nuclear sites, Tehran vowed revenge — then followed through. Oil spiked. Most Read from Bloomberg Yet in a year where crises have come in waves, traders from London to New York opted to hold
CNN — Before Israel launched an unprecedented wave of strikes against Iran’s nuclear facilities and top military leaders this week, its spies were already on the ground in enemy territory. Israeli intelligence agency Mossad had smuggled weapons into Iran ahead of the strikes, according to Israeli security officials, and would use the weapons to target
Americans’ fears of the stock market crashing are skyrocketing as the economy remains uncertain and President Donald Trump’s tariffs take effect, according to a report by predictive consumer data company Resonate. Nearly 26 percent of the population worries that Wall Street might hit rock bottom, says Resonate, and concerns of a broader economic slowdown have
| IFR 2587 – 14 Jun 2025 – 20 Jun 2025 | Christopher Whittall Banks’ foreign exchange trading desks are off to their best start to a year since 2022 after a sharp reversal in the US dollar ignited market volatility and triggered a surge in client activity. The largest global banks’ FX
Crude oil prices rose sharply as Israel’s attack on Iran raised fears of a broader disruption of Middle East oil supplies. Relatively low gasoline prices in the U.S. have helped to keep inflation in check. Brandon Bell/Getty Images North America hide caption toggle caption Brandon Bell/Getty Images North America Oil prices jumped and stocks tumbled
Rep. Jay Obernolte, R-Calif., joins ‘Mornings with Maria’ to analyze Israel’s strikes inside Iran and discuss President Donald Trump’s past warnings. Oil prices surged Friday after the Israeli Defense Forces (IDF) launched a sweeping strike on Iran’s nuclear facilities and military leaders. U.S. West Texas Intermediate prices climbed around 6% on Friday to $72
A high-octane company outside of the tech sector will be completing its first-ever forward stock split in the coming days. For more than three decades, investors have almost always had a next-big-thing trend or innovation to hold their attention. It started with the advent and proliferation of the internet in the mid-1990s and was followed
